Codename Midori is a derivative of Singularity that is meant to supersede Windows, and it is more than just a research project. Singularity, is an experimental microkernel and operating system project started in 2003 for which Microsoft posted the source code back in March. Unfortunately Singularity was developed exclusively for research purposes and is not intended for practical use.

Microsoft may be stupid but not that stupid to get rid of the stable windows kernel and use a new .NET based OS.

Instead I think the new OS from Microsoft would be minwin i.e. a stripped down version of windows kernel either in Windows 7 or 8. There were already rumours that MS and Asus are working together to port this mini Windows 7 version on ASUS EEE.

Codename Midori (I wish Microsoft named it "Doors" instead) is a derivative of Singularity that is meant to supersede Windows, and it is more than just a research project. Still, it is not ready to be previewed and it definitely has not got anything to do with Windows 7. Microsoft has put aside substantial resources and has put many bright people behind the project, which is headed by Eric Rudder, but other than that, very little is known. If it ever does debut, it will probably become available some time before CEO Steve Ballmer retires, nine or so years from now

If you read the article, you would see

A) It is not a rumour
B) it is based on singularity

Chances are if v1 is done in 9 years, and we use NT adoption as a reference, we are talking 16 years before this would become mainstream. That means this is a "looking ahead" type of project.